Tax Breaks You Might Have Overlooked

July 22, 2021 by First Federal Bank

Taxes-1Every year, American citizens perform their civic duty by writing a check for their taxes. While the process of filing taxes can be a challenge, the real stress comes when you find out how much of your hard-earned money needs to be sent to Uncle Sam. Before you finalize your next round of taxes, be sure to keep these easily overlooked tax breaks in mind and double check to see if any apply to you:

Gambling losses

This is one of the more unexpected ways to find a tax break. If you enjoy a little gambling at a local casino or online, you might be able to earn some of that money back in your tax return. In order to qualify, you’ll need to plan well in advance of tax season, so be sure to keep all of your gambling receipts that correlate to losing bets. Recording the specifics of each loss — including date, time, and location — is also helpful. The amount of cash you’ll receive will be limited to the amount of winnings you report as taxable income, so be sure that all of the numbers you include are accurate and applicable.

Jury pay

When it comes to civic responsibilities, being called to jury duty is every bit as important as paying your taxes. In many cases, an employer will ensure you still get paid your full salary during your time in the courtroom. However, there’s a catch: many companies will then ask you to turn over your jury pay to them as compensation. While this may feel like money being taken away from you, the good news is, this money is tax deductible. The experts at Turbotax.com write, “If you give the money to your employer you have a right to deduct the amount so you aren’t taxed on money that simply passes through your hands.” The next time you’re summoned for jury duty, remember you’re owed a little something extra on your next return.

Out-of-pocket charitable donations

One of the best-known and often-used tax deductions is for charitable donations. If you gave to a charity or donated items to a used-goods store or nonprofit organization, you’re entitled to a bit of that money back in your tax refund. However, there’s the potential to get even more cash back in exchange for donating to a good cause. As Rocky Mengle and Kevin McCormally discuss in an article for Kiplinger.com, items you spend your money on in service to a charity also qualify as deductible. “For example,” they write, “ingredients for dishes you prepare for a nonprofit organization's soup kitchen and stamps you buy for a school's fund-raising mailing count as charitable contributions.” They also cite gasoline purchased for vehicles driven for charity as being deductible. Every time you make one of these donations, be sure to hang onto the receipt.

By remembering these easy-to-miss tax breaks and deductions, your next tax bill could end up being much smaller than you ever thought possible. To find everything that applies to you, consider contacting a tax professional.

Categories: Taxes

Leave us a comment and join the conversation.